Car Tax Proposal DOA
Big city mayors and the Connecticut Conference of Municipalities continued to campaign against Gov. Dannel P. Malloy’s proposed budget Wednesday, calling the governor’s proposal to scrap car taxes for most residents “dead on arrival” in the legislature.
Malloy’s budget called for eliminating the tax on motor vehicles valued at $28,500 or less as part of his two-year budget. The Office of Fiscal Analysis has estimated that the proposal would leave cities and towns to lose $632.8 million in revenue.
Jim Finley, the CCM’s executive director, said the local assessors have put the revenue loss closer to $700 million. Finley and the mayors of the state’s largest cities appeared with organized labor representatives at a Wednesday morning press conference calling for a “better budget.”
Finley said he has not heard support for the car tax elimination proposal from legislative leaders or the members of the Finance, Revenue, and Bonding Committee.
“In discussions with legislators, the governor’s proposal as proposed on the car tax — eliminating it in Fiscal Year ‘15 — is dead on arrival. There are no votes for it,” he said.
Finley said CCM has been having conversations on municipal regionalism with House Speaker Brendan Sharkey and his commission, as well as other legislative leaders, in the hope of finding another way to reduce the “inequities” of the car tax without penalizing towns.
Malloy has defended his proposal, calling the car tax one of the most regressive taxes collected in the state.
“It is one of the most egregious taxes on the books in the state of Connecticut,” Malloy said earlier this month. “You own a car in Greenwich you’re charged less than 11 mills. You own a car in Hartford you’re charged 75 mills. It makes no sense.”
Finley said he took the governor at his word that his proposal was directed at providing tax relief to residents, but said it would hurt municipalities who may be forced to raise taxes.
“It comes at a terrible cost to municipalities. It happens in one year so there’s no run-up, there’s no phase in, there’s no ability for municipalities to deal with the repercussions of that car tax,” he said.
Finley said Sharkey assured CCM during the first couple weeks of the legislative session that whatever changes are made to the state’s car tax, they will not happen in this biennium.
“There will be an ability for cities and towns to prepare for it,” he said.
Larry Perosino, a spokesman for Sharkey, said the speaker has instructed his municipal regionalism panel to look at the issue of the state’s car tax. He said Sharkey has concerns about Malloy’s proposal because it does not include a mechanism to help towns recoup the lost revenue.
Rep. Patricia Widlitz, co-chairwoman of the Finance Committee, said she also had concerns but wouldn’t call the proposal dead. She said there are likely to be changes.
“We will have a full-blown discussion of options that we might consider. So I think it’s unfair to say the discussion is dead. It’s very much active, but perhaps not exactly the way the governor sees it,” she said.
Widlitz said lawmakers are looking at legislation from other states and intend to hold further hearings on the car tax.
“The challenge is to do something in a different way that does not penalize the municipalities from having the revenue that they are now getting from the property tax on motor vehicles,” she said.
Bridgeport Mayor Bill Finch said he was also willing to look at the car tax, just not as the governor has proposed changing it.
“The car tax is a lousy tax. Nobody here likes the car tax. But you can’t just take $17 or $18 million out of our budget without a plan to replace that,” he said.
Finch said he would support a proposal to have a statewide tax rate for cars, as former Gov. M. Jodi Rell proposed. But he said any proposal should be phased in over time.
Stamford Mayor Michael Pavia said the elimination of the auto tax would have a “staggering” effect on his city’s budget.
“We’re looking at a $21 million shortfall in revenue . . . which equates to over 330 positions in the city of Stamford,” he said. “What that would do is create an immediate 4.5 percent tax increase or shutting down government substantially.”
In the past, Malloy, who is a former mayor of Stamford, has acknowledged there may be some shifting on the car tax, but said he believes his proposal is the best way to go about it.
“I think my reform is the best one and essentially does away with the tax for 90 percent of homeowners,” he said.
In a Wednesday statement, Malloy’s Chief of Staff Mark Ojakian defended the car tax elimination proposal as providing middle class families with “some much-needed tax relief.”
“We understand that change is hard, but change is also necessary. Local leaders know that,” he said.